Why settlements are good for business

¶ … settlements good for business?

The question involves the analysis of a conflict and the cost in terms of time and resources for any business. It is the middle path that could avoid wasting of time and resources and speedy disposal of conflicts which could result in a win-win situation for both the parties and even enhance business value. One of the important methods of resolving conflicts is to gain a mediator who can suggest a viable settlement. The process of arbitration is mutually beneficial and cost saving. Time is a very crucial factor in conflict resolution -- for example the longer the time, greater the liability in legal costs and interest in some cases. It is advocated that settlement in terms of arbitration for business disputes is the best means of solving conflicts in business. Researches point that this theory is consistent with the actual practice found among the business that settled for arbitration rather than litigation.

In extreme cases it was also found to be effective. For example settlements enhance the process of debt recovery and avoid bankruptcy suits. It is pointed out that the bankruptcy that resulted on account of financial crunches must have resulted in a spate of litigation. However it was a surprise to note that there was no rise of litigation the reason being that settlements and flexible agreements were being negotiated between the affected parties. This is contrasted with the bankruptcy suits in the earlier depression when courts were filled with such pleas. In the case of insolvency this is a remarkable development which means that firms and businesses rather choose to settle on their terms and being flexible create a win-win situation for both parties.

Discussion

Winning situations conflict usually has a winner and the loser. In business a win can cause a great loss in terms of customers, relations and cost. Ironically winning may be harmful to the business itself. On the other hands a loss in litigation may lead to further litigation and spread of resources causing more damage. Thus the need for a business is to create a negotiation where settlements are reached in such a manner that both contending parties are satisfied. The heart of every negotiation thus must be a win -win situation. In a negotiation where there is a party likely to lose, that party always tries to get even. Litigation in legal forums essentially creates a win -lose situation which can be dragged to appeals and more appeals. This situation can be avoided by reaching settlements through the offices of arbitrators. Arbitration is one of the methods of coming to terms amicably at the least cost as was pointed out earlier. Negotiating settlements is in keeping with the principles namely, the aim is to win negotiations not relationships, and businesses must keep a proper professional face. The mutual satisfaction of needs and the common solutions are often arrived at the negotiation table where any flexible terms can be chalked out. Settling claims at the earliest possible opportunity prevents the organization from greater liabilities and costs.

That is why business today seeks arbitration and in-house settlements of disputes which can span a wide range of human activities from employee claims, insurance claims and customer or creditor claims. Even creditors opt to give flexible repayment policies to debtors to avoid bankruptcy suits. Mediation is now adopted as a method of solving even industrial disputes. This revolves around the facilitative approach, and the interventionist approach. This further shows that mediation will be used in the negotiation and will form the ultimate source of bringing the litigations to an end. Of course all disputes cannot be settled this way and some of the disputes between the employees concern the law like the 'Workplace Relations Act'. But it is still the best source both for the disputant and the business and helps collective bargaining and brings about social justice. The better way of avoiding a settlement is to avoid disputes and this call for exact representation of the state of affairs. Most disputes arise when the statements made and claims made are not accurate.

Success Trends

The business adaptation of strategic negotiation and settling of issues has become proverbial to the extent that governments today make use of the business knowledge and interest in providing support for conflict prevention in the regions of the world where they have interest in preventing turmoil. Businesses of today have made the art of negotiating and settling dispute into such a fine art that corporate mediation and involvement is sought after in the international conflicts for mediation and settlement. "Corporate social responsibility" is now made a slogan that essentially involves the settlement of issues, both geographically and socially within regions and make corporate entities be involved in settling conflicts even in areas that they may not be directly concerned. Settlement of issues with a win-win solution is paramount in politics, social and international arenas. The business world over have thus taken to settlement and negotiation rather than face it out in a conflict. Obviously the benefits are evident for statesmen to require corporate to use their skills in resolution of disputes in other areas. The survey conducted in various nations showed that all over the world settlements were cost effective and over 50% preferred this medium of settling contentions.

Involvement of law

It is not that settlements and dispute resolution altogether does away with the involvement of law or lawyers. Negotiation and often the settlement itself is often the work of eminent lawyers and the settlement issues involve a lot of negotiation, legal research and often bargaining for advantage. Alternative dispute resolution offers speed and flexibility and the ability to accommodate the will of either party to a contract or a solution and make it legal without further consequences. A settled dispute cannot be litigated further and causes the claims and disputes to stop. It also provides for a future rule book of conduct and action that is better than the results of litigations.

The drafting of enforceable settlements that are legally correct is a must and is the prime duty of legal functionaries. The avenue for settling a dispute without formality is a great advantage both to the business and the opposite contestant. This leads automatically to a win-win situation which is the most important reason that corporate choose to settle rather than litigate. In any audit it is found to be economically beneficial and provides the business with a fair face. Corporate identities and the way business is perceived by the public largely affect them and the business that settles sooner is deemed and perceived to be the 'fair company' and those that do not settle the 'litigation seeking' company. Image building too goes hand in hand with the selection of settlement in resolving disputes and is now a part of business strategy. Now it is realized that arbitration is more simple and effective in settlement of issues. The quicker a settlement is reached; greater is the impact on either party. That is why modern business goes in for negotiated settlements and arbitration rather than litigation. The most recent example of a settlement that has been defined in terms of historic interest is the Merrill Lynch settlement and this for the first time in Wall Street that an investor firm settled the issue and it has far reaching consequences for the industry. We can emphatically say that settlements are in most ways better as a solution that any other available.